McAdams On: Regulatory Relief

2/5/2010 3:25:50 PM

Regulatory intervention makes for a bad business
plan, and broadcasting unfortunately is so wound up in regulatory relief
Houdini would be challenged to free it. The industry has become reliant on
must-carry, retransmission consent and various other shards that keep
competitors from eating it alive. Now NBC stations are looking down the barrel
of a retrans rival from whom they must also negotiate network affiliations.
They’re now on the front line of a rapidly evolving media environment in which
dependence on traditional regulatory structures yields ever-greater
vulnerability.

A merger of Comcast and NBC Universal would represent the first time a cable
operator would take majority ownership of one of the nation’s largest broadcast
networks. It would put non-O&O NBC stations carried on Comcast systems at
the mercy of a mega corporation with interests diametrically opposed to those
stations. The head of their affiliate board yesterday implored Congress to
create yet another regulatory structure by which retrans and affiliation
negotiations are completely separate.

Few things seem more unlikely. Congress has no say over the proposed merger.
Comcast chief Brian Roberts and NBCU head Jeff Zucker just showed up on Capitol
Hill to be polite. Members of the House Commerce communications subcommittee
were polite back. They got a bit of a spleen venting from Sen. Al Franken
(D-Minn.) over in the Senate Judiciary Committee. He will therefore look tough
on big business to the folks back home.

Other lawmakers will posture accordingly. Roberts and Zucker will promise to be
nice. Zucker will then be relegated to the content community where hubris is a
requirement. Roberts and his deputy Steve Burke will repair to the castle in
Philly and craft a business-integration plan that will assure the further
growth of Comcast. The company started 47 years ago with 15 people, when Brian
Roberts was four. It now employs more than 100,000 people, in spite of
regulatory controls on rates, content and access to its infrastructure. It
could just be that Roberts and Burke know how to compete. That would seem to be
the whole idea of capitalism, until someone gets knocked off the top of the
heap.

Broadcasting enjoyed exclusive residence to that rarified air for many decades.
Now its advocates have to witness its desperate attempt to slow its descent by
clutching at regulations. For years, that community has wondered why
broadcasters didn’t mass market free DTV long, long before the transition date.
It could have emerged a true competitor to cable and satellite. But that didn’t
happen. It instead opted for retrans, the long-term sustainability of which
seems highly unlikely.

Comcast-NBCU is a simultaneous shot over the bow of retrans and the affiliate
model. The future of TV stations might well be 24/7 generators of local content
for any type of platform from cable to ATSC-enabled iPads. Whatever it becomes,
it’s unlikely to be limping along entirely dependent on regulatory relief. It’s
seriously time for the broadcast industry to stop looking back.